Labor MP wants ACCC enquiry into Aussie tech tax

newsFederal Labor MP Ed Husic has widened his complaint about price markups on Apple products in Australia to include other vendors such as Adobe, Microsoft and Lenovo, raising the possibility that an enquiry could be held into the matter by the Australian Competition and Consumer Commission.

The member for Chifley first raised the matter in Parliament in late March, noting he would write to Apple Australia managing director Tony King on the matter. The MP linked the debate to the issue of online retailing, noting that many consumers knew that the instant they got on the internet, they could easily see the price differentials that existed between products bought in Australia and those purchased overseas. However, in a follow-up speech last night (Hansard PDF), Husic noted Apple had not responded.

“Yet only a week later, it became clear that Apple was not going to move on the issue,” the MP added. “Tech website Delimiter reported that Apple was set to hit consumers again. Its new MacBook Air was estimated to cost up to $300 more than US consumers would have to pay, and the new Apple Thunderbolt display would cost up to $270 more.”

“July 16 came and went. Apple refused to respond, and I am staggered by their behaviour; they’ve snubbed consumer, media and parliamentary interest in this matter.” Apple has repeatedly been invited by Delimiter to respond to Husic’s comments, and the broader issue of pricing, but has not done so.

The three vendors have this morning been invited to comment on the matter of their Australian pricing, and on whether they would welcome an enquiry into the matter.

Video game retailers were also mentioned by Husic, with the MP stating that Australians paid “up to 60 percent more” for the same games than residents in the United States.

The MP also highlighted comments recently made by the Productivity Commission in its recent draft report into the retail sector. Like Husic, the Commission singled out Apple, as well as a number of other suppliers, for their higher Australian pricing, noting that arguments for marking up products for sale in Australia because of different market conditions were “not persuasive”, especially when it came to downloaded music, software and videos — where the distribution cost was negligible.

Husic last night said Australians should not be “fleeced for the sake of Silicon Valley’s bottom line”. “These companies would simply not do this to consumers in their home countries. Why do it in ours?” he asked. The MP said he had raised the matter within the Federal Government, and believed the Productivity Commission’s views on the matter were compelling.

“If IT companies are not prepared to be transparent about their pricing decisions, then perhaps it is time for our pricing watchdog, the ACCC, to take up the case for long-suffering consumers and carry out a formal inquiry into why these prices differ so wildly,” said Husic.

opinion/analysis
There’s no doubt that Husic’s comments here have a great deal of legitimacy. The term “Australian technology tax”, which has come into popular use over the past year or so, reflects a growing sentiment within the nation’s technology community that there is sparse justification for charging Australians more than our US cousins for the exact same technology goods.

The issue is particularly contentious, as Husic noted, when you consider prices around software, music and video content, which is usually downloaded from the exact same sources online but often slapped with a markup for Australians. It’s common practice for online outlets such as the iTunes store, Valve’s Steam gaming platform, Microsoft’s Xbox Live platform, Adobe’s web site and others to charge Australians more for the exact same content from the exact same server.

It’s possible, of course, to argue that Husic is just one MP who’s got a bee in his bonnet about this particular issue — and he’s a fairly new MP, having been elected last year during the 2010 Federal Election. However, the politician is, after all, part of Labor, who currently holds power, and he personally has a deep history within the Australian union movement which suggests he is not without influence within this side of politics.

In addition, there is no doubt that this issue will simply not go away. Over the past few years, although the trend of globalisation has continued to mean increasingly uniform delivery of products and services internationally, pricing has not followed suit outside the US, leading to a deep-held frustration about the issue in countries such as Australia.

With the possible exception of Labor’s Internet filter project, I would argue that this issue is one of the issues that Australia’s technology community is most angry about at the moment — and that anger will not dissipate until vendors start implementing more just pricing structures locally.

Among others, I’m tired of hearing stories from readers who have flown to the US, taken a few days’ vacation and picked up a few copies of needed Adobe software, then flown back and still come out ahead compared with what they would have spent if they had bought the same software in Australia. This should not be possible … and yet right now, it certainly is.

the Australian market is a tiny market for these large multinationals. if we start introducing more bureaucratic redtape (e.g. ACCC price monitoring, etc), all it will achieve is further hamper and discourage the domestic marketing of these highly-desirable, foreign-manufactured products.

hehe somehow I knew you would have a contrarian view on this, tosh. I would normally agree with you, but it’s clear the market is not resolving this issue on its own, due, I would argue, to a lack of competition in the areas for these products. There really is very little competition for Adobe CS, for example. It’s a perfect example of a problematic market which the ACCC should investigate.

say if the Govt mandates price regulation of a baseline product, “home edition”. this could result in the software company stripping away the valuable features from this regulated product, dropping the price to satisfy regulatory demands and exclusively-packaging the highly-desirable software functions and features in the “premium edition”.

the end result may be that the cost of accessing these “premium features” becomes even more expensive than before the regulatory intervention.

if the Government’s going to “declare” any products as “critical sectors” and mandate the ACCC to engage in regular price monitoring, it’s going to be shit like petrol, bread, butter, milk, etc. (even with petrol, the ACCC can’t set prices, all they do is promote public transparency of price variations.)

Sorry tosh, I do get what you are trying to say. I just don’t see how 60% markups (which are common) on digital delivered goods (with digital delivered customer support to boot) are ever justified.

Obviously there are no powers that currently exist to combat this, I didn’t imply those powers existed.

But we can’t ignore it. We have to fix it.
The first thing we do to fix it is bring attention to the imbalance. Your viewpoint appears to be: “Why are you talking about this” or “talking about this is wrong” or “debate on this subject is wrong”. Rather than say: “All of your ideas are wrong” how about: “Your ideas are wrong, but perhaps [xxx] might help.”. I know you don’t give a flying __ about what I or others think about your argument, but you might find yourself the target of trolls (like me, I admit I do troll at times) if your input actually *adds* to a conversation.

It isn’t about regulating pricing it is about ensuring that prices “fair”.

ACCC may have power under s46 Misuse of market power.

“deterring or preventing a person from engaging in competitive conduct in any market” Is a misuse of market power. The supplier wholesale pricing might run afoul of this as in the case of some products mentioned the Australian wholesale is actually more expensive than the US street price.

*It isn’t about regulating pricing it is about ensuring that prices “fair”.*

aside from critical infrastructure such as ports, rail and telco network, the ACCC has no powers to set or determine “fair prices” for consumer goods.

the most politically-sensitive prices are petrol, mortgage rates, groceries and property rents. the ACCC has ZERO powers to influence price-setting even in these sectors (let alone, iPods or Macbooks).

*”deterring or preventing a person from engaging in competitive conduct in any market” Is a misuse of market power. *

even in the famous DOJ vs Microsoft cases, the US and European Governments weren’t trying to “set prices”, they were trying to ban marketing practices of product bundling which impose barriers of entry for other players.

i’m not aware of Adobe forcing bundling of their products or pressuring distributors not to market competitor products.

*The supplier wholesale pricing might run afoul of this as in the case of some products mentioned the Australian wholesale is actually more expensive than the US street price.*

so? is there a law against price discrimination? NO.

a fish shop 5kms west of where i live sells rockling at 50% premium to another the fish shop 5kms east. the Woolworths closest to me sells fresh food at higher prices than a Woolworths a bit further way.

*What it come down is if the ACCC think Australian businesses should be competitive compared to “on-line prices”.*

Apple can set whatever online vs bricks & mortar price relativities it chooses. there’s no law against it whatsoever.

Ed Husic is just engaging in a populist political stunt (he’s an idiot).

the avenues open to get Adobe to lower prices isn’t in law, rather it’s a form of “moral suasion” by generating “community outrage”. good luck on that, i don’t think it will get much traction.

students and educational institutions already receive special discounts on Adobe and Apple products. the only people complaining are professionals who make a living using these professional packages and are too cheap to pay local market prices, or people who CHOOSE to buy Apple when there are other alternatives available.

if you want to go after a foreign multinational, the best way is to get the ATO to audit their transfer pricing practices and investigate any underpaying of corporate tax.

One thing that I really can’t believe lately is the price for the preorder of the game Saints Row the Third from Steam. I activated my US VPN and it was $49.99. Without the VPN, $89.99. Why do we have to pay nearly double for the EXACT same product, delivered in the EXACT same way?

Of course, with this, THQ set the price, not Valve, but still. I contacted THQ for a comment on this and didn’t hear anything back. At least Direct2Drive is offering it at the same price around the world.

Digital delivery.
10% markup in the UK might be explained by tax.
45% markup in Europe is getting a bit hard to stomach.
65% markup in Australia (in the exact same currency!!) is getting bloody rediculous. They aren’t even trying to mask that inequity.

PS. in your web browser you can just stick ?cc=[country code] on the end when at http://www.steampowered.com to see just how much you are being shafted locally for being australian.

It is not just tech it affects many other wholesale sectors where there is “vendor” lock-in or little competition due to either brand dominance or genuine lack of competition. Most of the tech sector problem are of the brand dominance for example people people don’t want a tablet PC they want an ipad or photo shop(photo edit package) or 3d shooter x(any 3d shooter). There are alternative to these products but due to brand dominance by the likes of apple, adobe ect.. it is hard for competitors to enter the market in a meaningful way.

Other examples outside the tech sectors include.
Wizards of the Coast(hasbro) with thier trading card games and D&D.
Games Workshop – with their varies war-hammer products.
Fender guitars and amps(although they are cleaning up there act a bit.
“Brand” name clothing and accessories.
A number of brands of specialist tools.

What is needed is a way for small retailers to dob in large wholesalers to the ACCC in an anonymous way as to many small retailers lose of access to these brands can be the death of their business.

There is one very good reason, taught in first year economics, and used daily by anyone in any sales related role – it’s called charging what the market will bare!
They charge what they like, and we keep buying because we can afford it, hardly mafia racketeering.
Honestly, I think some of you guys bitching about the extra we get charged in Australia for electronic toys need to google the problems going on in Somalia at the moment.
And maybe once you’ve finished googling African drought 2011, then you can do some research into the difference between the averages wages in Australia and the US. I’ll save you the time if you like, it’s between 20-25% (more in Australia), depending on whether or not you include govt subsidised farm workers. We get paid more, so we pay more, hardly rocket science.
If you don’t like it, try living in Mogadishu for a week.
#firstworldproblem

That’s a really dumb argument. So you think that because there are “problems going on in Somalia”, for which I can personally do very little about, I should feel it’s okay to pay double for a product in Australia as compared to the US? What sort of dumb logic is that? Feel free to remove yourself from the argument and head off to Somalia to solve their problems.

Quoted US prices do NOT include state or local (city) sales taxes which are regulated by each state/city — the federal government is not allowed to regulate interstate trade — and be as little as 1% or as high as 10%. Buyers in New York City pay more to order from the online Apple store than buyers across the river in New Jersey. NYC residents pays a state sales tax AND a New York City tax.

The Australian consumer gets screwed over because we’ve been screwed over for a very long time and we’re used to it now. From a business perspective, why not jack up the price if you can get away with it? You’d be mad not to. IMO the only thing which will save us is the internet, not only making people more aware of the problem (it’s very easy to compare prices now compared to 10-15 years ago) but also giving people the means to bypass the AU technology tax by ordering from overseas retailers. If this trend continues the artificial gap might start to narrow.

Unfortunately this problem extends well beyond the tech world and items which can downloaded or shipped easily. We pay much more for cars than the USA or Europe, even Japanese cars which technically should be cheaper because shipping costs are lower. Even worse, there have been examples where cars manufactured here and exported overseas (eg the Holden Monaro exported to the US as the Pontiac GTO a few years back) STILL cost more locally. There is no logical explanation for that one, apart from “let’s screw over the Aussies because we can”.

We have the same problem in Canada. Off the record, industry insiders will tell you “we charge what the market will bear”. They have a captive consumer audience. With the fall of the US dollar and the rise of the Canadian dollar, these price differences have grown so large that millions of Canadians now drive across the border to do their shopping in the United States. Increased cross-border shopping has finally forced Canadian retailers to lower their prices. Australia does not have this option though. However, for certain products such as cable television and wireless phone/data service, we are still very much captive, and pay up to 3 times what our neighbours to the south pay for the same service.

Ed Husic is no newbie. He stood for Greenway in the 2004 election, only barely losing to the egregious Louise Marcus (Lib) when she ran a smear campaign concerning his Muslim background (Husic’s parents are Bosnian Muslim). In that election he campaigned hard about the terrible state of Telstra’s infrastructure in the electorate, where even new estates were pair-gained and unable to receive even high-speed modem services. Telstra’s “unfixable technical issue” evaporated, accompanied by a press release from Marcus whose timing strongly suggested collaboration (remember that Telstra under Sol Trijilo desperately wanted to be fully divested, and Labor was resisting that).

I have no doubt that Husic is quite genuine in his concern, and the previous beatings of these companies about distribution and support costs are simply becoming more ridiculous as time passes. Good on him.

Charge too little, and the government goes after a foreign company for dumping. Charge too much and they say foreign companies are ripping off the locals. So just create a pricing agency responsible for pricing everything imported and get it over with :o

You should try living in Canada. We’ve lived with this for decades and for many of us you can drive for an hour to pick one up in a US city for their much lower price. Why? Good question.
Of course you can always speak with your wallet by just not buying the stuff.

We pay up to 3 times the price on mobiles & computers. They talk about $300 to $400 but we pay near to $1000 for the same thing. I refuse to buy this stuff from a usual dealer for this reason & as for Apple, I wouldn’t buy their products anyway. They are just a rip-off, as are M$ products…

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